My client is a contractor and providing civil, electrical and technical services to telecommunication companies. During financial year 2017-18, they issued invoices of Rs. 16779696.76, which is declared as turnover in their ITR and Audited Balance Sheet. During financial year 2017-18, their customer companies made payments of Rs. 18984146 to them against their few invoices of financial year 2016-17 and rest for financial year 2017-18 and deposited all deducted TDS u/s 194C and 194J belongs to above invoices of financial year 2016-17 and financial year 2017-18 in financial year 2017-18 and shown in their TDS return of financial year 2017-18. So Rs. 18984146 is showing as gross receipt in my client's Form-26AS of financial year 2017-18. While in above receipts of Rs. 18984146, few receipts belongs to invoices of financial year 2016-17 and rest receipts belongs to financial year 2017-18. It is noted that receipts belongs to financial year 2016-17 already declared in their ITR and audited balance sheet of financial 2016-17. Now they got defective return notice u/s 139(9), quoting error as below:
Error Descripttion: As per Rule 37BA of the Income Tax Rules, 1962, read with Section 199 of the Income Tax Act, 1961, credit of tax deducted at source shall be given for the assessment year for which such income is assessable. As seen from the return of income filed, credit for TDS has been claimed but the corresponding receipts/income has been omitted to be offered for taxation. The above omission is a defect, as per clause (a) of the Explanation provided under section 139(9).
Probable resolution: The gross receipts/income, on which tax has been deducted, are to be entered in the schedules under the respective heads of income, as they are assessable in the year in which the credit for the TDS is being claimed.
What to do to remove defect?
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